New 2024 asset owner tax credit approvals are on hold due to limited funds.
This does not apply to asset owners renewing a multi-year lease application from 2022 or 2023. More funding for new asset owners may become available after the deadline for multi-year lease renewals (late July), and/or as previously approved tax credits are cancelled due to postponed sales or other circumstances (ongoing and end of calendar year).
You may still apply for the tax credit, and we will contact you via email if your tax credit is approved. Applications for this program are approved, according to state law, in a first-come, first-served manner. An application must be complete (as outlined in the application instructions) for us to hold its place in line.
Note: RFA can still approve FBM tuition reimbursement tax credits for beginning farmers, as these funds are not restricted.
The Minnesota Beginning Farmer Tax Credit provides state tax credits to landlords and sellers (asset owners) who rent or sell farmland, equipment, livestock, and other agricultural assets to beginning farmers in the current tax year. Funding is limited. Tax credits are funded in a first-come, first-served manner regardless of the deadlines below. Applicants are highly encouraged to apply early in the year and may apply before sales close, if needed.
This is a two-part application. Both beginning farmers and asset owners must submit applications with leases and/or sale documents to hold their place in line for first-come, first-served funding. More instructions are available in the applications found in the "Apply Here" box on this page.
Tax Credit Details
The tax credit will go to the asset owner (landlord/seller) for leases and sales taking place in the current tax year as follows:
| Tax Credit Amount | Maximum Tax Credit | Application Due Date | |
|---|---|---|---|
| Cash Rentals | 10% of annual rental income | $7,000 | July 17, 2024 |
| Share Crop Rentals | 15% of annual rental income | $10,000 | July 17, 2024 |
| Sales | 8 or 12% of sale price* | $50,000 | Nov. 1, 2024 |
| Beginning Farmer FBM tuition reimbursement | Equal to tuition paid (see details below) | $1,500 | Nov. 1, 2024 |
In each given tax year, the asset owner can claim credits in either a rental or a sale with each eligible beginning farmer.
*Land Sale Updates
- Parents, grandparents, and siblings are now eligible for the tax credit if they sell farmland to a direct family member. This does not apply to leases or non-land sales (livestock, vehicles, etc.).
- The new tax credit maximum for land sales is $50,000.
- Credits for farmland sales will be 8% of the sale price for all beginning farmers buyers and 12% if the buyer is also an emerging farmer.
- Emerging Farmers include farmers or aspiring farmers who are women, veterans, persons with disabilities, American Indian or Alaskan Natives, members of a community of color, young (35 and younger), lesbian, gay, bisexual, transgender, queer, intersex, or asexual (LGBTQIA+), urban (reside in cities with a population over 5,000), and any other emerging farmers as determined by the commissioner.
Am I eligible?
Beginning farmer must
- Be a Minnesota resident who is seeking entry, or has entered into farming within the last 10 years.
- Be renting/buying as an individual (not an LLC or other business entity)
- Provide the majority of labor and management on a farm that is located in Minnesota.
- Have some farming experience and knowledge
- Provide positive projected earnings
- Have a net worth that does not exceed the limit provided under section 41B.03, subdivision 3, paragraph (a), clause (2). This limit is $1,013,000 in 2024.
- Be enrolled in or have completed an approved farm business management program within ten years of their first year of farming (more details below).
Asset owners
- May be an individual, trust, LLC, partnership, S-Corp, or other qualified pass-through entity.
- May claim the tax credit for as many years as the beginning farmer(s) they work with are eligible.
- Cannot be an equipment dealer, livestock dealer, or comparable entity engaged in the business of selling agricultural assets for profit.
- Except for farmland sales, cannot be directly related to the owner of the agricultural asset. This includes parents, grandparents, brothers, sisters, spouses, children, and grandchildren of the beginning farmer and their spouse.
Farm Business Management Requirement
Beginning farmers must be enrolled in or have completed an approved farm business management (FBM) program within ten years of their first year of farming for their asset owners to be eligible for the tax credit.
Reimbursement
Beginning farmers are eligible for a nonrefundable Minnesota tax credit equal to their FBM tuition paid up to a maximum of $1,500. This tax credit is available for up to three years.
Waiver
Beginning farmers may request to waive the FBM requirement if they have a 4-year agricultural degree, reasonable work experience in agricultural finance or have already completed an approved FBM program. If the beginning farmer has already completed 30 credits of FBM courses (or the equivalent hours in another approved FBM program), they do not need to register for additional courses.
What else?
- The RFA can approve leases with one, two, or three year terms. Recertifications for the second and third years of the lease will receive first priority in asset owner tax credit approvals if the beginning farmer submits their application by the deadline. If applying with a multi-year lease, the asset owner must reapply with a lease in the first year of the contract, and the beginning farmer must reapply every year to confirm their eligibility.
- An “agricultural asset” is defined as agricultural land, livestock, facilities, buildings, and machinery used for farming in Minnesota.
- This is a non-refundable tax credit for Minnesota state income taxes, which can be carried forward for up to 15 years for asset owners.
